Expanding in China: Starbucks doubles retail capacity


Expanding in China: Starbucks doubles retail capacity

"No Western company or brand is better positioned to evolve with the rapidly expanding Chinese middle class - and we continue to mindfully evolve a coffee culture in China where the reward will be healthy, long-term, profitable growth for decades to come".

The coffee giant laid out plans to compete with KFC in the race to become China's fastest-growing foreign food chain by opening a new store every 15 hours through 2022.

The vote of confidence comes as 120 USA companies and business groups line up to oppose the Trump administration's plan to slap tariffs on US$50 billion (S$67 billion) in Chinese imports.

This month, Nestle, the world's largest food and beverage company, also announced that it was paying $7.15bn in cash for the rights to sell Starbucks' coffee and tea products directly to its customers.

Starbucks dominates China's coffee scene, although it is seeing more competition from smaller rivals, similar to how it is coming under pressure from a "third wave" of boutique coffee sellers and cheaper rivals in the United States.

The Seattle-based company also expects to more than double its operating profit in China by fiscal year ending 2022. Revenue in China and the Asia-Pacific region jumped 54% last quarter compared with the same period a year earlier, according to Starbucks' latest earnings report.

It now has 3,300 outlets in China, compared with about 12,000 in the USA, including licensed stores. Yum China Holdings Inc, which separated from Yum!

While the same sales of the stores in the U.S. have not reached the expectations, robust performance in the new stores in the Stateside means its business is on track again for delivering the anticipated rate of growth in the U.S., Johnson said.

"Starbucks will look to leverage the recently announced global coffee alliance with Nestle to provide even more at-home options to the Chinese consumer in the future", the company said.

Nestle's relationships with distributors, giving it access to 1.5 million outlets in China, "dramatically accelerates our ability to bring those coffees to market", said Mr Johnson.

Currently, 60 percent of transactions in its China stores are through mobile payments.